Umbrella or not to Umbrella?

[supersteamer]

Brilliant - many thanks

[eek]

Thanks eek - that's very useful. I'm hoping to max out on pensions so will be much more than £700. It would be great if you get a chance to show your working, please?

Employer NI 13.8%
Apprenticeship Levy 0.5%
Employee NI (higher income rate) 2%

Umbrella fee is £100. and 100/0.163=£613

So the maths is wrong but not in the wrong direction and the umbrella fee is covered by the first £613 put in the pension pot. After that everything extra put into the pension pot will be 16.3% more than it would otherwise be.

[supersteamer]

The savings from an umbrella kick in once you are putting more than about £700 a month into your pension. After that you are putting an 16.3% compared to your current deemed payments approach.

Thanks eek - that's very useful. I'm hoping to max out on pensions so will be much more than £700. It would be great if you get a chance to show your working, please?

[eek]

Thanks - yes, that's the case here. I do (at least for now) have other work coming into my Ltd Company so I already have the overhead of keeping it going anyway.

I'm reluctant to add an Umbrella too, unless the savings from salary sacrifice are meaningful enough to cover the Umbrella margin and the inconvenience of having yet another party between me and my income.

The savings from an umbrella kick in once you are putting more than about £700 a month into your pension. After that you are putting an 16.3% compared to your current deemed payments approach.

[supersteamer]

The only reason to hang on to YourCo is either if you have other income streams

Thanks - yes, that's the case here. I do (at least for now) have other work coming into my Ltd Company so I already have the overhead of keeping it going anyway.

I'm reluctant to add an Umbrella too, unless the savings from salary sacrifice are meaningful enough to cover the Umbrella margin and the inconvenience of having yet another party between me and my income.

[malvolio]

OK, I'm in a similar position to the OP and I have tried thinking about it, but my brain is small and perhaps you could elaborate further?

I already have a Ltd company and have been offered some inside IR35 work. If I take it my pension options seem to be

1. Use Umbrella that allows Salary Sacrifice into a pension
2. Use MyCo and claim personal pension tax relief on contributions through SATR

Now, as I understand it, (2) isn't as advantageous as (1) since you only get relief on the income tax, not the NI.

However, you don't have to pay for an Umbrella company and also have the less concrete benefit of not having another party in the mix (assuming you will be running you own company anyway).

What I'm trying to see is how much (2) costs me compared to (1). Is there any calculators that can help here?

Of course I will "ask my accountant" but since they have a vested interest in me continuing to require their services rather than running off to an Umbrella, I'd rather check this independently.

There is very little point (And a few accounting issues) in running an inside gig through YourCo. Apart from anything else, all the money you receive will have to come straight back out again into your personal account before you can do anything with it. The only reason to hang on to YourCo is either if you have other income streams or a large pile of retained profits you can take out as needed or park in your pension fund.

Go umbrella. Ideally, go with Clarity.

[supersteamer]

You aren’t hiding anything but it’s clear that you haven’t given much thought as to how you are being paid. Because deemed payments are absolutely insane and screw up your pension options..

OK, I'm in a similar position to the OP and I have tried thinking about it, but my brain is small and perhaps you could elaborate further?

I already have a Ltd company and have been offered some inside IR35 work. If I take it my pension options seem to be

1. Use Umbrella that allows Salary Sacrifice into a pension
2. Use MyCo and claim personal pension tax relief on contributions through SATR

Now, as I understand it, (2) isn't as advantageous as (1) since you only get relief on the income tax, not the NI.

However, you don't have to pay for an Umbrella company and also have the less concrete benefit of not having another party in the mix (assuming you will be running you own company anyway).

What I'm trying to see is how much (2) costs me compared to (1). Is there any calculators that can help here?

Of course I will "ask my accountant" but since they have a vested interest in me continuing to require their services rather than running off to an Umbrella, I'd rather check this independently.

[eek]

I have no reason to hide anything. I am really surprised to read your unnecessary comment about me hiding something!

The amount is paid to my LTD company account with the tax and NI deducted at the source. I then transfer the net pay to my personal account each month from my company's account. I am also given contractor's wage slip; from my employer/agency clearly showing the deductions.

You aren’t hiding anything but it’s clear that you haven’t given much thought as to how you are being paid. Because deemed payments are absolutely insane and screw up your pension options..

[CDP90]

lucyclarityumbrella
Take a look at Claire Umbrella - Lucy from there posts on here.

Although my bigger concern is the discrepancy between this post (inside IR35) and your last, where you were billing direct from your LTD.
Is there something you’re not telling us?

I have no reason to hide anything. I am really surprised to read your unnecessary comment about me hiding something!

The amount is paid to my LTD company account with the tax and NI deducted at the source. I then transfer the net pay to my personal account each month from my company's account. I am also given contractor's wage slip; from my employer/agency clearly showing the deductions.

[eek]

lucyclarityumbrella
Take a look at Claire Umbrella - Lucy from there posts on here.

Although my bigger concern is the discrepancy between this post (inside IR35) and your last, where you were billing direct from your LTD.
Is there something you’re not telling us?

Thanks tgat explains his questions

He was receiving deemed payments from his agency / end client which completely screws up pensions because they weren't thought about / were too complex when the halfbaked plan was implemented.

So to answer the OPs question - a good quality umbrella firm will

sort out your annual leave (although it will come out of the day rate the company pays you)
sort out your pension abd allow it to be taken from your day rate before any deductions (except the umbrella fee)
won't give you expenses (because 1 -you've been there 2 years so you never could & 2 they haven't been allowed to since 2016.
pay you on the day they receive the money
don't take secret deductions

And there is a reason why we recommend Clarity - because we know that Lucy and co do all the above - and we know many of the others aren't as good.

[lucyclarityumbrella]

Thanks all, happy to have a chat and explain it all to you if that helps? Then you can decided the best option for you

[northernladuk]

I'd also recommend Lucy at Clarity Umbrella. Partly because IMO they are best around and partly because you think your client is your employer.

[WTFH]

lucyclarityumbrella
Take a look at Claire Umbrella - Lucy from there posts on here.

Although my bigger concern is the discrepancy between this post (inside IR35) and your last, where you were billing direct from your LTD.
Is there something you’re not telling us?

[CDP90]

Hello all,

I have been contracting for couple of years (inside IR35). I get paid directly from my employer and the tax and NI is deducted at the source, I get the net pay. I currently do not have any pension or holidays. If I take leave, I don't get paid.

I have been looking for a Umbrella company to sort out my annual leave, pension, expenses etc, however I have not found a single Umbrella company with a near 100% positive reviews. Most of them have of a large numbers of negative reviews such as issue with the payments, salary not paid on time, expenses not paid, slow response, money held, unhelpful and rude, delay in response etc.

My question is, is it still worth / better off going with a Umbrella company or keep contracting with my current arrangements?


Many thanks,
CDP90